When slumdogs reach for the sky

Slum redevelopment is among the most formidable of urban challenges. Standard policy prescriptions cover the full political spectrum from issuing property rights to wholesale relocation of the slum dwellers. Practical difficulties have tilted the choice towards the former. But is that really the soundest solution?

In his popular book, The Mystery of Capital (2000), Peruvian economist Hernando De Soto advocated that urban slum squatters be provided formal property rights. He argued that such rights would enable people to make more effective use of their assets by unlocking their full liquidity value—through mortgaging and raising loans, and enabling access to the formal economy—by registering commercial activities using that address. Formal rights, by legalizing encroachments, would also control the black economy and crime, eliminating the influence of local leaders who provide protection to the squatters against evictions and extract rents in return.

Taking a leaf out of De Soto’s recommendations, a few states in India have initiated populist policies that provide for title rights to squatters and encroachers on government lands. However, such policies come up against formidable problems.

Slums are characterized by haphazard development, with scant regard to town planning and land registration regulation—some of these regulations, for instance, mandate minimum road width (for infrastructure provision) and open-space requirements. Further, the slum plot sizes vary widely, ensuring that roads around them lack any linear alignment and uniformity in width. Incidentally, it’s these physical attributes that are largely responsible for much of the hygiene and infrastructure problems associated with our slums.

Once property rights are conferred on the slum dwellers, it is next to impossible to redevelop the slum—at least through widening the roads to meet the minimum town planning requirements. On the other hand, if slum plots are made regular after leaving out the required road widths, most encroachers will be left with almost nothing. Either way, it becomes difficult, even impossible, to accommodate all the residents and to redevelop the slum as an approved layout through directly giving property rights to the existing residents.

Moreover, merely granting property rights to slum residents will not only not resolve any of the perennial problems, but could also end up exacerbating them by distorting incentives. For example, armed with permanent rights on their irregularly sized encroachments, people will be encouraged to transact or reconstruct their respective plots with multi-storeyed dwelling units: bringing up bigger buildings when the roads or drains that support it are the same. These actions will render the already choking land mass more dense and amplify the problems arising from infrastructural deficiencies.

Even from purely economic considerations, it is inefficient to allot property rights to slum dwellers occupying small plots in valuable locations. Such fragmented titles come in the way of unlocking the full value of this prime real estate; it ends up inhibiting socially beneficial economic activity.

In these circumstances, the most realistic solution to slum development appears to be constructing in situ multi-storeyed housing on such encroachments. This will also ensure achievement of one of the primary objectives of all slum development programmes: providing dwelling units to the urban poor.

Further, this development will help unlock the full value of such lands and generate considerable positive externalities, promoting socially inclusive economic activity. Under this kind of development, the entire slum plot will be redesigned, with the roads and drains around it, to support a new multi-storeyed building: So it will also end up minimizing the marginal costs of infrastructure provisions in the future— the new roads and drains will support more units of housing—besides improving their quality. In any case, scarce vacant government (and even private) lands mean that slums and encroachments are among the only remaining major available sources of land to meet the burgeoning urban housing demand.

While this approach has already been tried in a few cities, success has been elusive. People prefer to have access to some land space and are averse to living on the upper floors, especially in apartments without lifts. Encroachers with larger plot sizes will not settle for the single housing unit allotted to them. Such problems will have to be addressed by giving them multiple units in proportion to their plot sizes or having apartment complexes with differential unit sizes. Breaking the control exercised by local political bosses, who use these slums as fiefdoms, will be another major challenge.

In this context, a strategy that views each slum development as an independent project, with its own challenges and solutions, may be preferable to the standard guidelines-driven one-size-fits-all approach of the government. Extensive and transparent negotiations with other confidence-building measures, to allay suspicion and fear among stakeholders, are critical for the success of such projects.

A market-based alternative would be a public-private partnership (PPP), where the private developer would construct housing units on a part of the slum land and develop the remaining land on a commercial basis. Many cities have large chunks of private lands which have been encroached by slums and which are held up in long-drawn-out litigation. Getting in place a sound regulatory framework can play a major role in encouraging both parties—slum dwellers and private owners—to negotiate mutually beneficial bargains, similar in nature to PPPs. Courts, too, could promote them by encouraging such settlements in their judgements on title disputes.

Government regulations that encourage such in situ development and discourage (or even prohibit) allotment of individual title rights on small and fragmented plots can push all stakeholders to embrace this model of slum development.

Gulzar Natarajan is a civil servant. These are the author’s personal views.